Unilever CEO Loses Cool With Goldman Analyst at Investor Day

(Bloomberg) -- Unilever Chief Executive Officer Paul Polman, who has built his reputation on a softer approach to capitalism, showed he can get feisty, too.

His combative side was on display at an investor meeting Thursday in Englewood Cliffs, New Jersey, where the Dutchman found himself confronted with tough questions from Goldman Sachs Group Inc. analyst Mitch Collett on the balance of cost savings, margin improvement and sales growth. Polman shot back, defending his approach and raising his voice in the process, according to a recording of the event. 

Polman said analysts were “pissing away” the possibility of higher shareholder returns by suggesting Unilever could spend more on growing its earnings through rising sales rather than through cutting costs.

Asked by Collett if Unilever might want to raise its brand-marketing spending to seek more revenue growth at the expense of a bit of margin, Polman took issue with what he called an implied assumption that the company's marketing outlays aren't competitive.

“You've been telling us the margins were low for the first five years, and I've been telling you we have made investments to be able to get this company back on track and where it belongs to be,” Polman said. “Here you are all saying ‘I want shareholder value, I want to drive it,' and you're pissing it away by not even asking us to give it. To me, that's incomprehensible.”

The CEO said there was “no brake” on efforts to raise volumes. “We are not doing anything on the volume side differently because we are promising you the margin,” he said. “The margin is entirely coming from what something that you should demand, but nobody is demanding, which is very amazing to me.”

Polman has been driving what he calls a more sustainable approach to doing business, from hand-washing initiatives in Africa to picking up niche brands with ecological cachet, arguing this strategy ultimately will yield higher growth than staples from soap to mayonnaise. 

Big food companies are facing demands by investors to cut costs and accelerate sales simultaneously as growth fades. Earlier this year, Nestle SA Chief Executive Officer Mark Schneider said many food and beverage companies are focused so much on cutting costs that they will undermine their growth prospects, challenging the mantra that's been driven by companies such as Kraft Heinz Co. and Anheuser-Busch InBev NV.

“If we find opportunities to invest more or if we need to invest more, we will do it, there's no question about that,” Polman said at the investor event. “I want to be very clear on that.”

The Dutch executive, who joined Unilever as CEO in January 2009, has pledged to save 6 billion euros ($7.2 billion) in a cost-cutting drive after rebuffing an unsolicited takeover bid from Kraft Heinz, known for its frugality, in February. Earlier this month, Unilever's board hired headhunting firm Egon Zehnder to cement its succession planning for Polman's eventual departure, which is expected to be in about 18 months, according to a person familiar with the situation.

To contact the reporter on this story: Thomas Buckley in London at tbuckley25@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III, Thomas Mulier

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